Prospectus link: https://www.sec.gov/Archives/edgar/data/1876042/000119312525070481/d737521ds1.html

On April 1, 2025, Circle Internet Financial submitted its S-1 prospectus to the U.S. Securities and Exchange Commission (SEC), planning to list on the New York Stock Exchange under the ticker "CRCL." This company, centered around the USDC stablecoin, previously attempted to go public via SPAC in 2022 but was unsuccessful. Now, it returns to the public eye with clearer financial data and strategic goals. What are Circle's intentions for going public? Can its financial condition support this move? What is unique about its business model? What does this mean for the crypto industry? By analyzing this prospectus, this article will answer these questions one by one, exploring the internal logic and potential impact of this stablecoin giant.

Part One: Circle's Financial Portrait

1.1 The Contradiction of Revenue Growth and Profit Decline

Circle's financial data presents a dual aspect of growth and pressure. In 2024, total revenue and reserve income reached $1.676 billion, a year-on-year increase of 16%, steadily rising from $1.450 billion in 2023. However, net income fell from $268 million to $156 million, a decline of 42%. Revenue increased, but profits decreased—what lies behind this?

Data shows that revenue growth is primarily driven by reserve income, which amounted to $1.661 billion in 2024, accounting for 99% of total revenue. This is attributed to a significant increase in USDC circulation—by March 2025, circulation reached $32 billion, a year-on-year growth of 36%. However, the pressure on costs cannot be ignored. Distribution and transaction costs rose from $720 million to $1.011 billion, a 40% increase, while operating expenses also increased from $453 million to $492 million, with general administrative expenses rising from $100 million to $137 million. The reason for this is significantly tied to the revenue-sharing agreement with Coinbase, which will be elaborated on later. I believe this indicates that while Circle's financial growth is impressive, the pressure on profits is also considerable.

1.2 The Secret of Reserve Income

Reserve income is the core pillar of Circle, reaching $1.661 billion in 2024, accounting for 99% of total revenue. This income comes from the interest earned on managing USDC reserve assets. USDC is a stablecoin pegged to the dollar at a 1:1 ratio, meaning for every USDC issued, there is $1 backing it. As of March 2025, the $32 billion in circulation implies an equivalent amount in reserve assets, which are invested in low-risk instruments, including U.S. Treasury bonds (85% managed by BlackRock's CircleReserveFund) and cash (10-20% held in globally systemically important banks).

For example, in 2024, assuming an average reserve size of $31 billion and a Treasury bond yield of 5.35% (according to U.S. Treasury data), the annualized interest would be approximately $1.659 billion, nearly matching the actual $1.661 billion. However, an unexpected detail is that Circle must share this income with Coinbase. According to Decrypt, Coinbase takes 50%, or $830.5 million, leaving Circle with only half. When I saw this revenue-sharing ratio, I understood why net income was relatively low. The stability of this income also depends on circulation and interest rates; if the Federal Reserve lowers rates or if USDC demand fluctuates, it could pose risks.

1.3 Overview of Assets and Liquidity

Circle's asset structure emphasizes liquidity and transparency. 85% of USDC reserves are invested in Treasury bonds, and 10-20% is cash held in top-tier banks, with monthly public reports enhancing trust. However, the company's own cash and short-term investment interest income was negative, at -$34.712 million in 2024, possibly affected by management fees. Specific total asset and liability data has not been fully disclosed in the current information, but the robustness of reserve management is evident. Circle's financial foundation is solid, but the impact of external environments cannot be overlooked.

Part Two: Deconstructing Circle's Business Model

2.1 The Core Position of USDC

Circle's business centers around USDC, the second-ranked stablecoin globally. According to CoinGecko data, USDC circulation is $60.1 billion (which may differ from the $32 billion in the S-1 due to timing), with a market share of about 26%, second only to Tether's 67%. It is widely used for payments, cross-border transfers (with a market size of $150 trillion), and decentralized finance (DeFi), leveraging blockchain technology for fast, low-cost transactions, superior to the traditional SWIFT system.

The advantages of USDC lie in compliance and transparency. It complies with the EU MiCA regulations (as introduced by Aiying (Europe)), obtaining French EMI licensing in July 2024, with monthly reserve reports verified by auditing firms, contrasting with the unregulated USDT. Of its revenue sources, 99% comes from reserve interest ($1.661 billion), while transaction fees and other income account for only $15.169 million, a minor proportion. This makes me feel that Circle is more about "earning interest on savings" rather than primarily relying on service fees.

2.2 Diversification Attempts

In addition to USDC, Circle is also developing digital wallets, cross-chain bridges (connecting different blockchains), and its own Layer 2 public chain, aiming to enhance the use cases and scalability of USDC. These businesses currently contribute limited revenue, included in the $15.169 million of other income. Nevertheless, they represent future growth potential, although the high investment in technology development may increase cost burdens in the short term.

2.3 The Subtle Relationship with Coinbase

The relationship between Circle and Coinbase is quite dramatic. The two co-founded the Centre Consortium to manage USDC. In 2023, Circle acquired Coinbase's stake for $210 million in stock, taking full control of Centre, but the revenue-sharing agreement continues. Coinbase takes 50% of reserve income, leading to distribution costs of $1.011 billion in 2024. This is both a legacy of cooperation and a drag on profits, making future adjustments to the revenue-sharing worth watching.

Part Three: Strategic Intent of the IPO

3.1 Funding and Expansion

Circle's IPO aims to raise funds, with a net amount tentatively set at X million dollars (depending on the issue price), part of which will be used to pay RSU taxes, with the remainder invested in operating capital, product development, and potential acquisitions. With a market share of only 26% for USDC, far below Tether's 67%, Circle clearly hopes to accelerate expansion through funding, such as advancing its Layer 2 public chain and penetrating global markets.

3.2 Responding to Regulation and Enhancing Credibility

U.S. regulation of stablecoins is becoming increasingly stringent. Circle has moved its headquarters to the U.S. and chosen to go public, proactively accepting SEC disclosure requirements. Public financial and reserve data not only meet regulatory expectations but also enhance institutional trust. I believe this transparency strategy is quite clever in the crypto industry and may help Circle gain more traditional financial partners.

3.3 Shareholders and Liquidity

Circle's equity structure is divided into Class A (1 vote/share), Class B (5 votes/share, capped at 30%), and Class C (no voting rights), with founders retaining control. The IPO will also provide liquidity for early investors and employees, with secondary market trading (valued at $4-5 billion) already showing demand. The IPO is both a financing move and a balancing act for shareholder returns.

Part Four: Implications for the Crypto Industry

4.1 Setting an Industry Benchmark

Circle's IPO opens a traditional exit path for crypto companies. In the past, ICOs and private placements were mainstream but carried high risks and poor liquidity. Circle's successful IPO demonstrates the feasibility of public markets, which may boost venture capital (VC) confidence and attract more funds into crypto startups, driving industry growth.

4.2 Possibilities for Innovative Approaches

If Circle succeeds, other companies may follow suit, such as entering the market quickly through SPACs or direct listings. Stock tokenization, trading on the blockchain, or integrating with DeFi (such as for lending or staking) are all potential new approaches. I imagine these models could blur the lines between traditional and crypto finance, bringing new opportunities for investors.

4.3 Risks and Challenges

However, going public is not without its challenges. The recent downturn in tech stocks (the worst quarter for Nasdaq since 2022) may depress pricing, and regulatory uncertainties (such as tightening stablecoin legislation) also pose threats. Circle's success or failure will test the adaptability of crypto companies in traditional markets.

Conclusion

Circle's IPO showcases its financial strength ($1.676 billion in revenue), business ambition (USDC + diversification), and industry aspirations. Reserve income is its lifeblood, but the revenue-sharing with Coinbase and dependence on interest rates are potential risks. I believe that if the IPO is successful, Circle could not only solidify its position in the stablecoin market but also potentially open the doors of traditional finance to the crypto industry, bringing capital and technological innovation. From compliance to exit paths, Circle's story is both a display of opportunities and a reminder of risks. At the intersection of crypto and traditional finance, its next steps are worth anticipating.

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